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Oil Correction Underway, Gold May Follow

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Correction well underway in oil

September is shaping up to be a corrective month. Tech stocks are sliding, the dollar is making a comeback and the oil rally has run out of fuel.

With $39 falling in WTI and $42 in Brent, the correction is on. There’s been a number of reported catalysts, the latest being Saudi Arabia selling at a discount but the reality is that we’re seeing stale longs exiting on mass.

The loss of support further cements the correction that was already underway and aceclerated the move. The next test for Brent is $40, with $37.50 being an interesting level in WTI.

Deeper correction on the cards for gold

Gold is coming under a little pressure as the dollar wrestles the break its downtrend and move into correction mode.

The greenback is having some luck in early trade this morning and may now look to build on its early successes. The sell-off has been losing momentum since the start of August and today’s breakout could trigger a broader corrective move.

That doesn’t bode well for the yellow metal which was already showing signs of weakness after last month’s sudden plunge and now $1,900 is looking very shaky indeed. Not that this would be catastrophic, the longer terms fundamentals are still bullish for gold, but a deeper correction is looking increasingly on the cards.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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